EXHIBIT 10.21
EMPLOYMENT AGREEMENT
AGREEMENT made as of this 6th day of April, 1998, by and between XXXXX
SYSTEMS, INC., a Texas corporation with its principal office at 000 Xxxxx Xxxxxx
X, X.X. Xxx 0000, Xxx Xxxx, Xxxxx 00000 (the "Corporation"), and X.X. XXXXX,
XX., residing at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxxxx 00000 ("Executive").
W I T N E S S E T H :
WHEREAS, Executive has heretofore been employed pursuant to an employment
agreement dated as of April 1, 1993 between the Corporation and Executive (the
"Prior Agreement");
WHEREAS, Executive and the Corporation desire to enter into a new
employment agreement that supersedes and replaces the Prior Agreement;
WHEREAS, the Corporation desires to continue to employ Executive, and
Executive is willing to undertake such employment, upon the terms and subject to
the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT OF EXECUTIVE. The Corporation hereby employs Executive as its
President and Chief Executive Officer, to perform the duties and
responsibilities incident to such offices, subject at all times to the control
and direction of the Board of Directors of the Corporation (the "Board of
Directors").
2. ACCEPTANCE OF EMPLOYMENT; TIME AND ATTENTION. Executive hereby accepts such
employment and agrees that throughout the Term (as hereinafter defined), he will
devote his full time, attention, knowledge and skills, faithfully, diligently
and to the best of his ability, in furtherance of the business of the
Corporation, and will perform the duties assigned to him pursuant to Section 1
hereof, subject, at all times, to the direction and control of the Board of
Directors. As the President and Chief Executive Officer, Executive shall perform
such specific duties and shall exercise such specific authority as may be
assigned to Executive from time to time by the Board of Directors. Executive
shall at all times be subject to, observe and carry out such rules, regulations,
policies, directions and restrictions as the Corporation shall from time to time
establish. During the Term, Executive shall not, without the written approval of
the Board of Directors first had and obtained in each instance, directly or
indirectly, accept employment or compensation from, or perform services of any
nature for, any business enterprise other than the Corporation and its
subsidiaries. During the Term, Executive shall not be entitled to additional
compensation for rendering employment services to subsidiaries of the Company or
for serving in any office of the Corporation or any of its subsidiaries to which
he is elected or appointed.
PAGE 1 OF 9
3. TERM. Except as otherwise provided herein, Executive's employment hereunder
shall be for a term commencing as of April 6, 1998 and shall continue through
September 30, 2001 (the "Initial Term"), which may be renewed for such one (1)
year periods as the Corporation and Executive may mutually agree during the
ninety (90) day period immediately prior to the expiration of the Initial Term
or any renewal thereof (the Initial Term and any such renewal thereof are
hereinafter collectively referred to as the "Term").
4. COMPENSATION. Commencing as of April 6, 1998, the Corporation shall pay to
Executive and the Employee shall accept as his entire compensation for his
services hereunder the following, which shall be subject to withholding and
other employment taxes imposed by applicable law:
(a) The Corporation shall pay Executive a base salary ("Base Salary") at
the rate of (i) one hundred twenty thousand ($120,000) dollars per year for the
first year of his employment, (ii) one hundred forty thousand ($140,000) dollars
per year for the second year of his employment, and (iii) one hundred fifty
thousand ($150,000) dollars per year for the third year of his employment. For
each year thereafter while this Agreement remains in effect, the Base Salary
will be increased by such higher amount as shall be determined by the Board of
Directors. The Base Salary shall be payable in equal monthly installments.
(b) In addition to his Base Salary hereunder, the Executive shall be
entitled to a profit incentive bonus (the "Bonus"). For each fiscal year during
Executive's employment hereunder, commencing with the fiscal year October 1,
1997 to September 30, 1998, the Bonus shall equal seven and one-half (7-1/2)
percent of the net consolidated after-tax profits of the Corporation. The net
consolidated after-tax profits of the Corporation shall mean the gross sales and
other income from operations of the Corporation and its subsidiaries (whether
now existing or hereinafter created), less costs of goods sold and operating
expense, depreciation expenses, bad debt write off and payment of corporate
income taxes. The net consolidated after-tax profits as used herein shall be
determined by the independent public accountants of the Corporation, in
accordance with generally accepted accounting principles and their determination
shall be binding and conclusive on the parties hereto. The Bonus is payable in
cash or, at the sole discretion of the Executive, in restricted stock of the
Corporation within ninety (90) days from the close and publication of the
audited fiscal year results.
5. STOCK OPTIONS. The Corporation is granting to Executive on the date hereof,
the following options: (i) a five-year option (the "Firm Option") to purchase
240,000 shares of Common Stock of the Corporation, $.01 par value (the "Common
Stock") at an exercise price of $3.50 per share, which shall be exercisable as
to 80,000 Common Shares from and after the first anniversary of the date of
grant, as to an additional 80,000 Common Shares from and after the second
anniversary of the date of grant, and as to the remaining 80,000 Common Shares
from and after the third anniversary of the date of grant; and (ii) a five-year
option (the "Trading Price Option") to purchase 90,000 shares of Common Stock at
an exercise price of $1.445 per share, which shall be exercisable subsequent to
the time that the Fair Market Value (as such term is hereinafter defined) of the
shares of Common Stock exceeds $6.50 for 10 consecutive trading days during the
Term. Fair Market Value means the closing price of the shares of Common Stock on
the U.S. national securities exchange on which the shares of Common Stock are
listed (if the shares are so listed) or on the
PAGE 2 OF 9
NASDAQ National Market or Small Cap Market (if the Common Shares are regularly
quoted on the NASDAQ National Market or Small Cap Market), or, if not so listed
or regularly quoted or if there is no such closing price, the mean between the
closing bid and asked prices of the shares of Common Stock in the
over-the-counter market or on such exchange or on NASDAQ, or, if such bid and
asked prices shall not be available, as reported by any nationally recognized
quotation service selected by the Corporation. On the date hereof, the shares of
Common Stock are listed and traded on the NASDAQ National Market.
Notwithstanding the foregoing, the exercise of the Firm Option is contingent
upon the Corporation obtaining stockholder approval for the grant of such
option, in accordance with the NASDAQ marketplace rules.
In the event of a Change of Control (as such term is hereinafter defined),
(i) the Firm Option shall become exercisable in full (without regard to the
terms under which they were originally granted; provided that stockholder
approval of such option has been previously obtained) and (ii) the Trading Price
Option shall become exercisable if the per share valuation accorded the shares
of Common Stock in the transaction resulting in such Change of Control is equal
to or greater than $6.50. In the case of a Change of Control in which the shares
of Common Stock are not valued, E.G., the replacement of a majority of the Board
of Directors, the Trading Price Option shall become exercisable in full.
(a) For the purposes of this Agreement, (a) a Change of Control means (1)
the direct or indirect sale, lease, exchange or other transfer of all or
substantially all (50% or more) of the assets of the Corporation to any person
or entity or group of persons or entities acting in concert as a partnership or
other group (a "Group of Persons"), (2) the merger, consolidation or other
business combination of the Corporation with or into another corporation with
the effect that the shareholders of the Corporation immediately following the
merger, consolidation or other business combination, hold 50% or less of the
combined voting power of the then outstanding securities of the surviving
corporation of such merger, consolidation or other business combination
ordinarily (and apart from rights accruing under special circumstances) having
the right to vote in the election of directors of such surviving entity, (3) the
replacement of a majority of the Board of Directors in any given year as
compared to the directors who constituted the Board of Directors at the
beginning of such year, and such replacement shall not have been approved by the
Board of Directors, as constituted at the beginning of such year, or (4) a
person or Group of Persons shall, as a result of a tender or exchange offer,
open market purchases, privately negotiated purchases or otherwise, have become
the beneficial owner (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended,) of securities of the Corporation representing
50% or more of the combined voting power of the then outstanding securities of
the Corporation ordinarily (and apart from rights accruing under special
circumstances) having the right to vote in the election of directors.
6. ADDITIONAL BENEFITS. (a) In addition to such Base Salary, Executive (and his
family) shall be entitled to participate, to the extent he is (and they are)
eligible under the terms and conditions thereof, in any profit-sharing, pension,
retirement, hospitalization, insurance, disability, medical service, stock
option, bonus or other employee benefit plan generally available to the
executive officers of the Corporation that may be in effect from time to time
during the Term, as well as any discretionary bonus pool of the Corporation. The
Corporation shall be under no obligation to institute or continue the existence
of any such employee benefit plan.
PAGE 3 OF 9
(a) The Corporation shall obtain and maintain in full force and effect
during the Term, at the Corporation's sole cost and expense, a policy or
policies of term insurance on the life of Executive in the aggregate face amount
of two million ($2,000,000) dollars. Executive shall submit to any physical
examinations necessary to obtain such policies and shall otherwise cooperate
with the Corporation in obtaining such insurance coverage. Any insurance policy
maintained by the Corporation on the life of Executive pursuant to this Section
6(b) shall be made payable to such beneficiary or beneficiaries as Executive may
designate by written notice to the Corporation and the Corporation agrees,
promptly upon receipt of such notice, to take all such action as may be
necessary so as to notify the appropriate insurance company of any change of
beneficiary.
(b) The Corporation shall provide Executive with a full-size automobile
for his business and personal use. The Corporation shall keep such automobile
adequately insured and will reimburse Executive for all gasoline and repair
expenditures and other similar charges in accordance with Section 7 of this
Agreement. In lieu of the automobile provided by the Company, Executive may
elect to receive a non-accountable expense allowance of five hundred ($500)
dollars per month to reimburse him for the cost and expense of operating and
maintaining an automobile, which costs and expenses may include without
limitation, vehicle loan and lease payments, insurance premiums, gasoline and
repair expenditures and other similar charges. Executive acknowledges that the
value of his use of such automobile will be reported on his W-2 form in
accordance with applicable rules and regulations of the Internal Revenue Service
and agrees to take all reasonable steps necessary to assist the Corporation in
complying with any such rules and regulations.
7. REIMBURSEMENT OF EXPENSES. The Corporation shall reimburse Executive in
accordance with applicable policies of the Corporation for all expenses
reasonably incurred by him in connection with the performance of his duties
hereunder and the business of the Corporation, upon the submission to the
Corporation of appropriate receipts or vouchers.
8. FACILITIES AND PERSONNEL. Executive shall be provided a private office,
secretarial services and such other facilities, supplies, personnel and services
as shall be required or reasonably requested for the performance of his duties
hereunder.
9. VACATION. Executive shall be entitled to four (4) weeks' paid vacation in
respect of each twelve (12) month period during the Term, such vacation to be
taken at times mutually agreeable to Executive and the Board of Directors.
Unused vacation shall be carried over to the subsequent twelve (12) month period
and may not be carried over beyond the next twelve (12) month period.
10. D & O INSURANCE COVERAGE. The Corporation shall use its best efforts to
obtain and maintain, at the Corporation's cost and expense, directors' and
officers' liability insurance coverage for the directors and officers of the
Corporation, including Executive. Nothing herein shall be deemed to require the
Corporation to provide such coverage for Executive if it is not then providing
such coverage generally to its directors and officers.
11. RESTRICTIVE COVENANT. In consideration of the Corporation's entering into
this Agreement, Executive agrees that during the period of his employment
hereunder, he will not (i) directly or indirectly own, manage, operate, join,
control, participate in, invest in, or otherwise be connected with, in any
manner, whether as an officer, director, employee, partner, investor or
otherwise, any
PAGE 4 OF 9
business entity that is engaged in the business of operating convenience stores,
marketing and distributing petroleum products, or providing environmental
remediation services or any other business which the Corporation is then engaged
during such period, (ii) for himself or on behalf of any other person,
partnership, corporation or entity, call on any customer of the Corporation for
the purpose of soliciting, diverting or taking away any customer from the
Corporation, or (iii) induce, influence, or seek to induce or influence, any
person engaged as an employee, representative, agent, independent contractor or
otherwise by the Corporation, to terminate his or her relationship with the
Corporation. Nothing herein contained shall be deemed to prohibit Executive from
investing his funds in securities of an issuer if the securities of such issuer
are listed for trading on a national securities exchange or are traded in the
over-the-counter market and Executive's holdings therein represent less than 2%
of the total number of shares or principal amount of the securities of such
issuer outstanding.
Executive acknowledges that the provisions of this Section 11 are
reasonable and necessary for the protection of the Corporation, and that each
provision, and the period or periods of time, geographic areas and types and
scope of restrictions on the activities specified herein are, and are intended
to be, divisible. If any provision of this Section 11, including any sentence,
clause or part hereof, shall be deemed contrary to law or invalid or
unenforceable in any respect by a court of competent jurisdiction, the remaining
provisions shall not be affected, but shall, subject to the discretion of such
court, remain in full force and effect and any invalid and unenforceable
provisions shall be deemed, without further action on the part of the parties
hereto, modified, amended and limited to the extent necessary to render the same
valid and enforceable.
12. CONFIDENTIAL INFORMATION. Executive shall hold in a fiduciary capacity for
the benefit of the Corporation all information, knowledge and data relating to
or concerned with its operations, sales, business and affairs, and he shall not,
at any time for a period of two (2) years after termination of his employment
hereunder, use, disclose or divulge any such information, knowledge or data to
any person, firm or corporation (unless the Corporation no longer treats such
information as confidential) other than to the Corporation or its designees and
employees or except as may otherwise be required in connection with the business
and affairs of the Corporation; PROVIDED, HOWEVER, that Executive may disclose
or divulge such information, knowledge or data that (i) was known to Executive
at the commencement of his employment with the Corporation; (ii) is or becomes
generally available to the public through no wrongful act on Executive's part;
or (iii) becomes available to Executive from a person or entity other than the
Corporation; and PROVIDED, FURTHER, that the provisions of this Section 12 shall
not apply to Executive's know-how to the extent utilized by him in subsequent
employment otherwise than in breach of this Agreement.
13. EQUITABLE RELIEF. The parties hereto acknowledge that Executive's services
are unique and that, in the event of a breach or a threatened breach by
Executive of Section 11 or 12 hereof, the Corporation shall not have an adequate
remedy at law. Accordingly, in the event of any such breach or threatened breach
by Executive, the Corporation shall be entitled to such equitable and injunctive
relief as may be available to restrain Executive and any business, firm,
partnership, individual, corporation or entity participating in such breach or
threatened breach from the violation of the provisions hereof. Nothing herein
shall be construed as prohibiting the Corporation from pursuing any other
remedies available at law or in equity for such breach or threatened breach,
including the recovery of damages and the immediate termination of the
employment of Executive hereunder.
PAGE 5 OF 9
14. DEATH. In the event of termination of Executive's employment hereunder by
reason of his death, the Corporation shall pay a benefit (the "Benefit Payment")
to such person or persons as Executive shall, at his option, from time to time
designate by written instrument delivered to the Corporation, each subsequent
designation to revoke all prior designations, or if no such designation is made,
to Executive's estate (the "Payment Beneficiary"). The Benefit Payment shall be
in an amount equal to one and one-half times Executive's then current Base
Salary, and shall be payable to the Payment Beneficiary in equal quarterly
installments over a period of one and one-half years, provided that if the
Corporation then maintains a life insurance policy on the life of Executive
under which it is the beneficiary, the amount of the death benefit payable
thereunder, to a maximum amount equal to the Benefit Payment, less installments
of the Benefit Payment theretofore paid, shall be paid to the Payment
Beneficiary on the Benefit Payment installment payment date next succeeding the
date on which the Corporation receives such death benefit proceeds and the
remainder of the Benefit Payment, if any, shall be paid in equal quarterly
installments as provided above.
15. DISABILITY. In the event that during the term of his employment by the
Corporation Executive shall become Disabled (as such term is hereinafter
defined) he shall continue to receive the full amount of the Base Salary to
which he was theretofore entitled for a period of eighteen (18) months after he
shall be deemed to have become Disabled. The Corporation may terminate this
Agreement and Executive's employment hereunder at any time after Executive is
Disabled, upon at least 10 days' prior written notice; provided, however, that
such termination shall not affect the Corporation's obligations to make payments
to Executive as provided in this Section 15. For the purposes of this Agreement,
Executive shall be deemed to have become Disabled when (x) by reason of physical
or mental incapacity, Executive is not able to perform a substantial portion of
his duties hereunder for a period of 180 consecutive days or for 180 days in any
one (1) year period or (y) when Executive's physician or a physician designated
by the Corporation shall have determined that Executive shall not be able, by
reason of physical or mental incapacity, to perform a substantial portion of his
duties hereunder. In the event that Executive shall dispute any determination of
his Disability pursuant to clauses (x) or (y) above, Executive shall not be
deemed to be Disabled unless and until three physicians qualified to practice
medicine in the United States of America, one to be selected by the Corporation,
one to be selected by Executive and the third to be selected by the designated
physicians, have determined (by a majority vote) that Executive is Disabled. If
Executive shall receive benefits under any disability policy maintained by the
Corporation, the Corporation shall be entitled to deduct the amount equal to the
benefits so received from base salary that they otherwise would have been
required to pay to Executive as provided above.
16. TERMINATION FOR CAUSE. The Corporation may at any time upon written notice
to Executive terminate Executive's employment for Cause. For purposes of this
Agreement, the following shall constitute Cause: (i) the willful and repeated
failure of Executive to perform any material duties hereunder or gross
negligence of Executive in the performance of such duties, and if such failure
or gross negligence is susceptible of cure by Executive, the failure to effect
such cure within 20 days after written notice of such failure or gross
negligence is given to Executive; (ii) excessive use of alcohol or illegal drugs
interfering with the performance of Executive's duties hereunder; (iii) theft,
embezzlement, fraud, misappropriation of funds, other acts of dishonesty or the
violation of any law or ethical rule relating to Executive's employment by the
Corporation; (iv) the conviction of a felony
PAGE 6 OF 9
or other crime involving moral turpitude by Executive; or (v) the breach by
Executive of any other material provision of this Agreement, and if such breach
is susceptible of cure by Executive, the failure to effect such cure within 30
days after written notice of such breach is given to Executive. For purposes of
this Agreement, an action shall be considered "willful" if it is done
intentionally, purposely or knowingly, distinguished from an act done
carelessly, thoughtlessly or inadvertently. In any such event, Executive shall
be entitled to receive his Base Salary to and including the date of termination.
17. TERMINATION FOR EMPLOYER BREACH. Executive may upon written notice to the
Corporation terminate this Agreement (a termination for "Employer Breach") in
the event of the breach by the Corporation of any material provision of this
Agreement, including, without limitation, a breach the Corporation of Section 1
or 4 hereof, and if such breach is susceptible of cure, the failure to effect
such cure within 30 days after written notice of such breach is given to the
Corporation. The termination of this Agreement by Executive by reason of
Employer Breach shall not constitute a waiver by Executive of any of his rights
to compensation of any kind hereunder.
18. CUTBACK OF PARACHUTE PAYMENT. Notwithstanding anything to the contrary
herein, if it shall be determined that in the event of a change of control any
payment or distribution by the Corporation to or for the benefit of Executive (a
"Parachute Payment") would be subject to the excise tax (the "Excise Tax")
imposed by Section 4999 of the Code, then the Parachute Payment shall be reduced
to the largest amount as will result in such payments being deductible to the
Corporation and not subject to the Excise Tax.
19. INSURANCE POLICIES. The Corporation shall have the right from time to time
to purchase, increase, modify or terminate insurance policies on the life of
Executive for the benefit of the Corporation, in such amounts as the Corporation
shall determine in its sole discretion. In connection therewith, Executive
shall, at such time or times and at such place or places as the Corporation may
reasonably direct, submit himself to such physical examinations and execute and
deliver such documents as the Corporation may deem necessary or desirable.
20. SURVIVAL OF PROVISIONS. Neither the termination of this Agreement, nor of
Executive's employment hereunder, shall terminate or affect in any manner any
provision of this Agreement that is intended by its terms to survive such
termination.
21. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire agreement
of the parties hereto, and the Prior Agreement between the Corporation and
Executive is hereby superseded and terminated effective immediately and shall be
without further force or effect. No amendment or modification shall be valid or
binding unless made in writing and signed by the party against whom enforcement
thereof is sought.
22. NOTICES. Any notice required, permitted or desired to be given pursuant to
any of the provisions of this Agreement shall be deemed to have been
sufficiently given or served for all purposes if delivered in person or by
responsible overnight delivery service or sent by certified mail, return receipt
requested, postage and fees prepaid as follows:
PAGE 7 OF 9
If to the Corporation, at its address set forth above, with
copies to:
Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
If to Executive, at his address set forth above.
Either of the parties hereto may at any time and from time to time change the
address to which notice shall be sent hereunder by notice to the other party
given under this Section 23. The date of the giving of any notice hand delivered
or delivered by responsible overnight carrier shall be the date of its delivery
and of any notice sent by mail shall be the date five days after the date of the
posting of the mail.
23. NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement, nor the right to
receive any payments hereunder, may be assigned by Executive. This Agreement
shall be binding upon Executive, his heirs, executors and administrators and
upon the Corporation, its successors and assigns.
24. WAIVERS. No course of dealing nor any delay on the part of the Corporation
in exercising any rights hereunder shall operate as a waiver of any such rights.
No waiver of any default or breach of this Agreement shall be deemed a
continuing waiver or a waiver of any other breach or default.
25. GOVERNING LAW. This Agreement shall be governed, interpreted and construed
in accordance with the laws of the State of Texas, without regard to the effects
of the principles of conflicts of laws thereof. Jurisdiction of disputes with
regard to this Agreement or any aspect of the employment of Executive by the
Company shall be exclusively in the courts of the State of Texas and venue
relating to any such litigation shall be set in the court of proper jurisdiction
in Matagorda County, Texas.
26. INVALIDITY. If any clause, paragraph, section or part of this Agreement
shall be held or declared to be void, invalid or illegal, for any reason, by any
court of competent jurisdiction, such provision shall be ineffective but shall
not in any way invalidate or affect any other clause, paragraph, section or part
of this Agreement.
27. FURTHER ASSURANCES. Each of the parties shall execute such documents and
take such other actions as may be reasonably requested by the other party to
carry out the provisions and purposes of this Agreement in accordance with its
terms.
IN WITNESS WHEREOF, the parties hereto have caused this Employment
Agreement to be duly executed as of the day and year first above written.
PAGE 8 OF 9
XXXXX SYSTEMS, INC.
By: /S/ X.X. XXXXX, XX.
Name: X.X. Xxxxx, Xx.
Title: Chairman and Chief
Executive Officer
/S/ X.X. XXXXX, XX.
X.X. XXXXX, XX.
PAGE 9 OF 9
